SMBs in India to Invest about U.S.$640 Million on Packaged Software This Year

Monday August 13 11:00 AM

Small and medium businesses (up to 999 employees) in India are on track to invest about US$ 640 million on buying packaged software this year, up more than 25% over what they invested in all of 2006. Spending on databases, accounting, networking, productivity and system software will account for more than 90% of the total software spending by SMBs this year, according to the latest report by New York-based Access Markets International (AMI) Partners, Inc.

"We expect the Indian IT market to maintain this bullish trend because of increased IT awareness among SMBs," says Nirupam Chaudhuri, Research Manager with AMI Partners. "SMB users have become more alert and they know what they need to be able to accelerate their business. A small percentage of IT-savvy SMBs have progressed to the third wave of IT adoption and are now demanding tailor-made solutions with superior support services." AMI defines the third wave of IT adoption as a stage of "Extending the Enterprise", where due to adoption of advanced infrastructure solutions there is improved collaboration and closeness to business partners.

Small businesses (SBs, or companies with up to 99 employees) posted a 23% rise in software spending while medium businesses (MBs, or companies with 100 to 999 employees) showed 30% growth in software spend last year. "Channels continue to dominate the Indian distribution ecosystem and users remain strongly influenced by the way an ISV or an SI counsels buyers in typical deals for solution pieces, support infrastructure and technology lines," Mr. Chaudhuri says. "Vendors maintain close monitoring of their own - as well as their competitor's - channel quotients and set up new alliances to target new geographies and niche verticals."

Generally, investment in packaged software is driven by business needs. Specific requirements decide the modules or packages for implementation. SMBs are also most concerned about rationalization of investments. Having state of the art technology with the latest security features is viewed as a major factor in overcoming competition. Vendors can no longer push anything and everything as a package to users. "These days SMBs need to be convinced on all the features a software package contains, and are only willing to pay for features they plan to use," Mr. Chaudhuri says. "In keeping with this trend, vendors have also launched solutions and packages in which pay-as-you-use features are incorporated, thus allowing SMBs to access only the modules they've paid for."

The top management in SMBs wants a snapshot of all processes in the company in real time. Thus, such analytics applications are gaining traction. There is an increased focus on factors such as employee productivity, enhancing customer interaction systems, automating and streamlining operations, round the clock connectivity, information protection, etc. These factors are in turn driving adoption of the appropriate packaged software and solutions. Even the decision-making to procure such solutions has transformed into a shared and systematic process. Middle management and product heads have important roles in deciding the solutions the company will invest in.

"Hosted applications have surged as well," Mr. Chaudhuri says. "Recent advances in security and a growing level of awareness of the benefits of hosted applications have gone a long way to reduce inhibitions about information security. The prevailing low bandwidth costs have added impetus to the adoption of such solutions."

About the Studies

AMI's 2006-2007 India Small Business Market Overview and Comprehensive Market Opportunity Assessment and 2006-2007 India Medium Business Market Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI's annual surveys of SMBs in India, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

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